B.C. could launch a money-laundering inquiry right now, experts say

WATCH: B.C.'s attorney general sits down with federal minister to talk money laundering

Vancouver — it’s a city often called an important gateway to Asia’s markets.

But gangsters have also used it in a whole new scheme for laundering money.

Called the “Vancouver Model,” it works like this: the region’s casinos serve as hubs for VIP gamblers from China to buy casino chips with profits from the sale of deadly drugs like fentanyl.

Through underground bank exchanges, the VIPs can repay the bags of cash — “fronted” to them in B.C. by transnational drug traffickers — into gang-controlled bank accounts in Asia in order to fund more drug imports to B.C.

Now the BC Government and Service Employees’ Union (BCGEU), traditionally a strong supporter of the BC NDP, is calling for one, saying a public inquiry is “the best way to learn the truth about a crisis that has claimed thousands of lives, and has made B.C. the most unaffordable province to live in.”

B.C. Solicitor General Mike Farnworth and Attorney General David Eby are starting to argue for an inquiry behind the scenes, according to sources who have spoken to Global News. However, others — like Geoff Meggs, chief of staff to B.C. Premier John Horgan — have opposed the idea, party insiders said.

The federal case’s collapse removed a “significant barrier” to holding a public inquiry into money laundering, Eby said — but he still wants to hold off.

Earlier this month, the B.C. attorney general said that if German’s review of money laundering in real estate didn’t produce satisfactory answers, “then we will have to look at a public inquiry as a way to get that information out.”

But German’s not the only one investigating the issue: B.C. Finance Minister Carole James has also tapped an expert panel to look at the province’s real estate sector and “offer solutions to prevent market manipulation and money laundering.”

Premier John Horgan’s position on a public inquiry has evolved, but he remains cautious. He continues to say he’s “not ruling out” an inquiry. But after the collapse of E-Pirate, Horgan said the “rule of law” had failed in B.C., and he hinted that the bar for calling an inquiry had been lowered.

Legal experts, meanwhile, see strong value in an inquiry. They believe it could pull together the work B.C. is doing already and potentially net more money than it costs to investigate in the first place.

Depending on how an inquiry is structured, it can involve interviews and oral testimony, and commissioners can have the power to subpoena witnesses.

They’re not courts, however — legal scholars Robert Centa and Patrick Macklem drew a clear distinction between the two in a 2001 paper.

“Commissions of inquiry that focus on retrospective allocations of fault and blame run the risk of being little more than poor imitations of our civil or criminal justice systems,” they wrote.

The Charbonneau Commission

Quebec’s Charbonneau Commission has served as an example for those calling for an inquiry into money laundering.

That commission spent four years looking into “collusion and corruption in the awarding and management of public contracts” in Quebec’s construction industry; it also looked at “any links to the financing of political parties.”

The inquiry found that corruption was more “deeply rooted” than investigators thought.

Engineering firms had colluded with companies to support political candidates so that they could obtain public contracts after elections, the inquiry found. Videos played at the inquiry showed alleged Mafiosi stuffing money into their socks.

That inquiry, however, covered events far different from money laundering in B.C.

There are enough similarities between B.C.’s money laundering issue and corruption in Quebec construction to suggest that a public inquiry could yield similar results, said Saravan Veylan, a property lawyer with the Vancouver office of MLT Aikins.

“If the inquiry is going to be designed around fault-finding, then it is entirely possible that a very broad mandate will make a fault-finding exercise unworkable, in that too broad means that there’s too much to deal with,” Veylan said.

“But if it’s about fact-finding and coming up with recommendations around putting general money laundering, corruption to rest going forward, then it would make sense to have a broader scope.”

Gordon, too, saw similarities with the issues that Charbonneau investigated, though the focus in Quebec, he said, was “pretty parochial” next to money laundering.

“It was contained pretty much within a handful of industries in a single province in Canada,” he said.

Meanwhile, the problems exposed in B.C. are international in scope, involving other countries and economic systems.

“The money laundering in B.C. and the fallout from it has connections to Chinese cultural mores around conducting business,” he said. “The issue of passing money around to facilitate activities is something that’s institutionalized in the Chinese system.”

WATCH: David Eby shows video of money laundering in action

For now, Eby is focused on implementing recommendations from German’s first report and looking toward his next one.

Should a money laundering inquiry proceed in B.C., with a slate of recommendations, Eby expects that they would be taken “very seriously.”

“It would be my expectation that we would be looking at implementing all of them if we went in that direction.”